All Forum Posts by: Terrell Williams

Johnny: Yes, there are 9 apartments, a commercial laundry facility and a potential hair salon that used to be a garage. The laundry facility rents for $1,800 per month. The salon has the potential for $400/mo. And the vacant 3 bd has the potential for another $850/mo.

So technically, it's 9 apartments and 2 commercial units (laundry and potential salon) total.

Joel,

Thanks for that insight. The building is 93 yrs old, so I take your point that minor repairs could easily turn to major repairs. As you can imagine, there is a bit of differed maintenance. I'll have to consider 60%-65% operating costs. Here's how I see the Cap rate at 60% expenses.

Proposed Purchase Price: $270,000

Current Rental Income: $91,800 (includes laundry facility)

Operating Expenses: $55,080 (60% opt. expenses)

NOI: $36,720

Cap rate: 13.6% ($36,720/$270,000)

Cash on Cash Return: 27% ($36,720-$16,700 debt serv)/$75,000 cash invested

Tyson: I'll need to make the 10k in repairs to the 3bd unit asap as it would rent for $850/mo. That would bring the annual rental income to $102,000. That's at full occupancy. There is still a potential salon (former garage) that I could rent for another $400/mo.

David: This is a Buy & Hold. I plan on making improvements and holding it for at least 5 years. However, if things went south the exit strategy would be to dress up the property and aggresively market it based on favorable cap rate and income potential.

Matthew....The financing is just about in place. I have the 25% in cash for the down payment. I'm not familiar with apod data. Could you help explain more? All I need is for the Seller to accept my bid and then I can go to work.

Matt... Yup, it's located where they taped part of HBO's "The Wire" a few years ago. Luckily, I grew up in the area and can work with the tenants. The location does put a lot of investors out of the game, but it works to my advantage when the numbers work.

BP,

I need your help and analysis. Today I won the bid on a 9-10 unit (3 - three bedroom, 6- two bedroom) apartment building at a public auction. The 10th unit is a commercial laundry facility in the basement. Risky, Risky, Risky. And yes, it's in a tough neighborhood in Baltimore. The deal is contingent upon the "out of town" seller agreeing to the offer.

Here are the numbers;

Purchase price with Auctioneers commission: $283k ($270k +5%)

Monthly rents: $5,850 (one unit is vacant and needs $10k of work)

Yearly gross rents: $70,200

NOI: $35,000 (assuming 50% operating expenses)

Debt Service: $16,700

Cash Flow Before Taxes: $18,300

Commercial Laundry Lease: $21,600

Tenants pay for their own seperate utilities, LL pays for water except the Laundry pays for their own water. There is a 350sf building (former 2 car garage) in the rear that was used as a salon with a bathroom that's vacant. Could rent for $400-$500 per month.

This is a Buy & Hold. What's your feeling on the numbers? What if the Seller comes back and wants more money...say $300k?

I did have a chance to walk 6 of the 10 units and talk with the tenants. Most were happy, but a few had minor issues to fix.

Thanks

Bill Gulley: I appreciate that advice. I'll look up "net listing" to determine how this might work in cooperation with my Broker. I already have an LLC for dealing with investment properties, but its new and I haven't done my first deal yet. I certainly don't want my "creative financing" to get me into trouble!

Michael Siekerka - Thanks for that insight. I agree, the terms of this deal need to be airtight and drafted by a real estate lawyer. I understand that there are a number of other costs involved. However, there are no bank fees, title fees, broker/lender fees on the front end of the deal. The holding cost will be minimum since there is no mortgage on the home. We will need to determine who is the "decider" to use a George Bush word - when it comes to making rehab decisions.

Has anyone ever worked with a Seller to flip their home?

Here's what I'm thinking... Seller has a single family house worth about $60k as-is. He owns it free and clear with no liens. I've offered to buy it for cash for $60k - they rejected my offer. The house has a ARV of $200-$220k. Is it OK to offer to partner with the Seller by offering $60k to rehab the place and to list it myself? I'm a licensed Realtor/Investor. In essence we would split the proceeds after its sold. We would both have $60k into the deal for a total of $120k. After it's sold at say $200k, we could split the $80k evenly.
Has anyone done anything like this "seller assisted flip"?

OK, my first post shouldn't be on an I-Pad :-)

I'm interested in learning from local REI's and I'm looking for a mentor. I've lived in Baltimore and Baltimore County for 45 years...I know it well and I've worked in DC for over 20 years. I'm a Licensed Realtor in MD with a little cash to invest.

The local market in the Pikesville, Randallstown, Owings Mills, Woodlawn area is very tight. The inventory of homes is unbeleivably low. REO's are down, Short Sales are up. Investors seem to be everywhere buying up the few properties that become available.

Interested in buy & hold and flipping...albeit a very competitive market for that now.

Would love to connect with the meet-up group anywhere between Baltimore and DC. Looking to learn from anyone interested in working with newbie!

Hey BP folks! I've been on the fence reading BP on and off for years. Now I'm ready to